Value-Based Working Capital Management

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Value-Based Working Capital Management

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Value-Based Working Capital Management

Determining Liquid Asset Levels in Entrepreneurial Environments

Grzegorz Michalski

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First published in 2014 by PALGRAVE MACMILLAN® in the United States—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010.

Where this book is distributed in the UK, Europe, and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS.

Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world.

Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries.

ISBN: 978-1-137-39799-7

Library of Congress Cataloging-in-Publication Data Michalski, Grzegorz, 1972–

Value-based working capital management : determining liquid asset levels in entrepreneurial environments/Grzegorz Michalski.

pages cm

Includes bibliographical references and index.

ISBN 978-1-137-39799-7 (hardback) 1. Working capital. 2. Cash management. I. Title.

HG4028.W65M53 2013 658.15'2—dc23

2013039990

A catalogue record of the book is available from the British Library.

Design by Amnet.

First edition: April 2014 10 9 8 7 6 5 4 3 2 1

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This book is dedicated to

My wife Anna, son Samuel, daughter Eunika, and son Mateusz

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Acknowledgments xxi Introduction 1 1 Working Capital Management in the Business Context 7 2 Understanding and Measuring Financial Liquidity Levels 33 3 Intrinsic and External Values of Liquidity and Optimization 77 4 Net Working Capital Management Strategies 127 Conclusion 151 Bibliography 155 Index 179

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Value-Based Working Capital Management

Determining Liquid Asset Levels in Entrepreneurial Environments

Grzegorz Michalski Print Pub Date:

April 2014 Online date:

April 2014

DOI:

10.1057/9781137391834 ebook ISBNs:

9781137391834 PDF 9781137391827 EPUB Print ISBNs:

9781137397997 HB 9781137391827 Pages:

204 pp

Value-Based Working Capital Management analyzes the causes and effects of improper cash flow management between entrepreneurial organizations with varying levels of risk. This work looks at the motives and criteria for decision-making by entrepreneurs in their efforts to protect the financial security of their businesses and manage financial liquidity. Michalski argues that businesses exposed to greater risk need a different approach to managing liquidity levels.

Introduction

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Value-Based Working Capital Management

Value-Based Working Capital Management

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Value-Based Working Capital Management

Determining Liquid Asset Levels in Entrepreneurial Environments

Grzegorz Michalski

This book is dedicated to

My wife Anna, son Samuel, daughter Eunika, and son Mateusz

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Contents

List of Figures ix

List of Tables xiii

List of Equations xvii

Value-Based Working Capital Management

Determining Liquid Asset Levels in Entrepreneurial Environments